Benzinga – Benzinga Contributor, Zacks.
visa (NYSE:V) has been one of the most trending stocks recently among Zacks.com visitors. Therefore, we recommend considering several factors that can affect a stock’s short-term performance.
The global payments processor’s stock has returned -2.3% over the past month compared to a -2.5% change for the Zacks S&P 500 Composite Index. The Zacks Financial Transaction Services industry, which includes Visa, has declined 4.3% in this period. The key question here is where the stock is likely to go in the short term.
While media releases and rumors about significant changes in a company’s business prospects typically cause its stock to “trend” and lead to immediate price movements, there are some fundamentals that ultimately govern buy-and-hold decisions. There are always facts.
Regarding revisions to performance forecasts
Zacks prioritizes evaluating changes in a company’s future earnings expectations above all else. That’s because we believe that the present value of future income streams determines the fair value of a stock.
Our analysis is fundamentally based on how the sell-side analysts covering a given stock are revising their earnings estimates to account for the latest business trends. As a company’s earnings expectations rise, so does the fair value of its stock. And if a stock’s fair value is higher than its current market price, investors will tend to buy the stock, which will cause the stock price to rise. For this reason, empirical research has shown that there is a strong correlation between trends in earnings forecast revisions and short-term stock price movements.
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Visa is expected to post earnings of $2.41 per share for the current quarter, representing a year-over-year change of +11.6%. Over the past 30 days, the Zacks Consensus Estimate has changed by -1.6%.
The consensus earnings estimate for the current fiscal year of $9.90 represents a +12.9% year-over-year change. This estimate has changed by +0.2% over the past 30 days.
Next year’s consensus earnings estimate of $10.98 represents a +10.9% change from the earnings that Visa was expected to report a year ago. Over the past month, the forecast has changed by -0.8%.
The Zacks Rank, a proprietary stock evaluation tool with an impressive, outside-audited track record of impressive results, leverages the power of earnings estimate revisions to be a more conclusive indicator of a stock’s short-term price performance. . The magnitude of the recent consensus estimate change, as well as three other factors related to earnings expectations, have led to Visa’s Zacks Rank #3 (Hold).
The chart below shows the company’s consensus EPS estimate over the next 12 months over time.
12 months EPS
Expected revenue growth rate
There’s no question that a company’s profit growth is the best indicator of its financial health, but nothing will happen if it doesn’t make a profit. It’s nearly impossible for a company to expand its bottom line without growing it over the long term. Therefore, it’s important to know a company’s earnings growth potential.
For Visa, the consensus revenue estimate for the current quarter is $8.89 billion, representing a year-over-year change of +9.4%. The current and next fiscal year estimates of $35.73 billion and $39.12 billion represent changes of +9.4% and +9.5%, respectively.
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Last reported results and surprising details
Visa reported revenue of $8.78 billion in its last reported quarter, representing a +9.9% year-over-year change. EPS for the same period was $2.51, compared to $2.09 a year ago.
The reported revenue represents a surprise of +2.07% when compared to the Zacks Consensus Estimate of $8.6 billion. EPS surprise was +3.29%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company has surpassed consensus revenue estimates every time during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. Whether a stock’s current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects is a key determinant of future stock performance.
Compare the current value of a company’s valuation multiples, such as price to earnings (P/E), price to sales (P/S), and price to cash flow (P/CF), to its own value, while also Value helps determine whether a stock is fairly valued, overvalued, or undervalued, and by comparing a company to its peers based on these parameters, you can determine whether a stock is reasonably priced. I can understand the gender.
Zacks Value Style Score (part of the Zacks Style Scores system). We pay close attention to both traditional and unconventional metrics to rate stocks from A to F (A is better than B, B is better than C, and A is better than B). B is better than C, etc.) and can be very helpful in identifying whether a stock is overvalued, properly valued, or temporarily undervalued.
Visa is rated a D on this score, indicating that it trades at a premium relative to its peers.
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conclusion
The facts discussed here, and much of the other information on Zacks.com, may help you decide whether the market buzz surrounding Visa is worth paying attention to. However, the company’s Zacks Rank #3 suggests it could outperform the broader market in the near term.
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